Agricultural Productivity in India –Issues and Challenges

.Measures to Boost Productivity and Innovations in

Agricultural Lendings by Banks: Future Trends

(Topic 1 – Rank 2)

CENTRAL STAFF COLLEGE

8 UNDERHILL ROAD
CIVIL LINES
DELHI-110054

UNDER THE GUIDANCE OF: MR. RAKESH SHUKLA

Participants:

*Hari Narayan Nishad * Ravindra kumar

*Pranati Sahoo *Mamta Sahoo

* Banita Rana *Purushottam Prasad

*Santosh kumar
A) INTRODUCT ION
“Agriculture is the backbone of the Indian economy and the villages are the life
lines of growth of India.”

Agriculture is a very important sector for the sustained growth of the Indian economy. About 70
per cent of the rural households and 8 per cent of urban households are still primarily dependent
on agriculture for employment. Since some three-quarters of the population live in rural areas, a
majority of households thus depend principally on this sector. Though industrialization of the
Indian Economy has adversely affected the share of agriculture in the GDP, the fact cannot be
ignored that India has undergone a series of successful agricultural revolution starting with the
green revolution in wheat and rice in the 1960’s and 1970’s the white revolution in the milk to
the yellow revolution in oilseeds in 1980’s. As a result, India has achieved self sufficiency in
agriculture.

The principle change in 20th century was green revolution during which all countries experienced
a massive increase in yield per unit area in time owing largely to greater control of production
factor. It is the 20th century that must be considered the century of science based agriculture. It is
also characterized as blue print century in which more centralized engineering approach to
agriculture including the setting of production targets was a central driver for increased
agricultural output and 21st century will be marked by a return to a more location specific
ecological approach to agriculture.

A) Indian agriculture –current scenario

· Deceleration in agricultural growth: Growth declined from 3.62% during 1984-95 to
less than 2% in 1995-96 to 2004-05.
· Share of agriculture in GDP declined from 24.4% in 1996-97 to 18.7% in 2007.
· Technology fatigue: less emphasis on efficient and sustainable use of soil, nutrients
and water leading to declination in the productivity.
· Declining public investments in agriculture.
 PRIORITY SECTOR ADVANCES
(Growth Over Last 2 Years)
50000

45000
43412
40000
40198
35000 Priority
33410 Sector
30000
Agriculture
25000
18571 19947
- Direct
20000 Agri.
14587
15000 - Indirect
13829 14213
Agri.
10000 11026
5734
5000 3561 4741

0
Mar.06 Mar.07 Mar.08
Data excludes IBPC of Rs 500 crore issued in favour of ICICI Bank 6

Graph: Advances in priority sector – current scene

C) Factors responsible for less agricultural productivity in India

· Weak framework for sustainable water management and irrigation

· Traditional method
· Small land holding
· Inadequate infrastructure and services in rural areas
· Over-regulation of domestic agricultural trade.
· Rural poor have little access to credit
Table:1 VISION 2013- Activity wise targets – Direct Agriculture
March March March March March March CAGR
2008 2009 2010 2011 2012 2013
Dairy 478 700 1030 1500 2200 3200 46.27
%age Growth 46.44 47.14 45.63 46.67 45.45
Poultry 63 125 200 300 430 600 56.95
%age Growth 98.41 60.00 50.00 43.33 39.53
Fisheries 43 90 145 225 300 400 56.21
%age Growth 109.30 61.11 55.17 33.33 33.33
Crop loan 8000 10200 13200 17000 21800 28000 28.47
%age Growth 27.50 29.41 28.79 28.24 28.44
Agriculture machinery 1873 2230 2750 3400 4230 5300 23.13
%age Growth 19.06 23.32 23.64 24.41 25.30
Processing by individuals 250 350 500 700 960 1300 39.06
%age Growth 40.00 42.86 40.00 37.14 35.42
Plantation 222 280 425 650 1000 1500 46.54
%age Growth 26.13 51.79 52.94 53.85 50.00
Minor Irrigation 165 240 350 500 680 900 40.40
%age Growth 45.45 45.83 42.86 36.00 32.35
Debt Swap from Money lenders 100 250 400 750 1100
%age Growth 150.00 60.00 87.50 46.67
Advance against warehouse
receipts 20 100 150 225 340 500 90.37
%age Growth 400.00 50.00 50.00 51.11 47.06
Others 3099 2585 3000 3500 4110 4700 8.69
Total 14213 17000 22000 28400 36800 47500 29 27.29
19.61 29.41 29.09 29.58 29.08

D.1) Measures to boost productivity:

· Improving water resources and Irrigation/drainage management
· Strengthening rural non-farm sector growth.
· Improving access to land
· Improving access to rural finance
· Information and communication technology
· Technological Prospective.

D.2) Govt. initiatives

· AIBP (accelerated irrigation benefit programme) launched, to enhance irrigation
potential by 5.1 million hectares.
· National Horticulture Mission: To cover 340 districts in 18 states and 2 UTs.
· National dairy Development Board to promote dairying in 326 districts under
National Dairy Plan.
· National Fisheries Development Board to promote inland as well as marine
fisheries.
 · National Rained area Development Authority: For increasing productivity of
rainfed areas (approx. 60% of total cultivable land).
· Financial Inclusion initiatives

D.3) Some innovative technology that need full scale implementation in India
· System of rice intensification(SRI)
· Precision agriculture
· Use of GM crops
· High density polyethylene agrishade nets—a high value added product.
· Organic farming

E) Salient recommendations of sub-groups on agricultural extension:

· Full-fledged establishment of ATMAs(Agricultural Tecnology Mngt. Agency)
· Identification of progressive farmers and their training
· Publicity of Kishan Call Centres
· Promotion of National Institute of Agricultural Extension Management (MANAGE) as
International Centre of excellence in Agricultural Extension Management
· Support of Self Help Groups with better credit, marketing facilities and support services.
· Key role of KVKs in support of the Mass Media and ICT initiatives
· Launching of a dedicated TV channel for agriculture.

F) Risk in agriculture:
The agriculture sector is exposed to a variety of risks which occur with frequency. These include
climate and weather risks, natural catastrophes pest and diseases, which cause highly variable
production outcomes.
F.1) Risk management strategies:

Table -2: Risk Management Strategies in Agriculture

Informal Mechanisms Formal Mechanisms

Market Publicly
based provided
On-farm • Avoiding exposure to risk • Agricultural
• Crop diversification and extension
inter-cropping • Supply of
• Plot diversification quality
• Mixed farming seeds, inputs, etc
• Diversification of income • Pest
Ex Ante Strategies

source management
• Buffer stock accumulation systems
of crops or liquid assets • Infrastructures
• Adoption of advanced (roads,
cropping techniques dams, irrigation
(fertilization, irrigation, systems)
resistant varieties)

Sharing • Crop sharing • Contract

risk with • Sharing of agricultural marketing
others equipment, irrigation • futures
sources, etc contracts
• Informal risk pool • Insurance
Coping • Credit • Social
with assistance
shocks (calamity relief,
foodfor-work,
Ex Post Strategie

etc)
• Rescheduling
loans
• Agricultural
insurance
• Relaxations in
grain
procurement
procedures
• Supply of
fodder
• Cash transfer
G) Role of the banking sector in increasing agricultural productivity in India
· Kishan credit card scheme
· Insurance
· Training and consultancy
· Warehousing and cold storage
· Agro-tech and agro-clinic
· SBI and Cargil India

G) Conclusion
Finally we can conclude that the Indian agricultural productivity suffers mainly because of the
expensive credit, a distorted market, intermediaries (who increase cost rather than add value),
controlled prices and poor infrastructure. It has also suffered because of poor irrigation facilities,
use of traditional technology and practices, farmer’s poor economic status, fragmented
landholdings, lack of post harvest infrastructure and lack of farm extension and if even a part of
these measures mentioned above are followed we are sure that we will be part of not only the
green revolution but the whole rainbow revolution. Banks should consider these facts to invest
more in infrastructure facilities like irrigation facilities, processing, storage and marketing
activities. Such agricultural infrastructure can be improved by banks, as a there are ample
prospects for banks to invest in the above activities and make banks more participative through
policy implementation and create a conducive environment so that the agriculture sector can be
cared for like any other sector.